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I’m always on the hunt for cheap companies, and one of the means of identifying “cheap” that I like to use is the Graham number. Its formula is pretty straightforward: Multiply earnings per share by book value per share, then multiply that by 22.5, and finally take the square root. The result, in dollars, is the Graham number. As with any valuation, the Graham number only tells part of the story, and it’s important to look at the story behind the numbers to see if there are underlying reasons why the company appears so cheap.

Last week, I discovered that the financial sector is among the cheapest sectors out there when it comes to the Graham number. The reasons for this are varied, so I will be taking a deeper look at the 27 financial companies that currently trade below their Graham valuations to see if there is real value in the company, or if there is an underlying reason investors should avoid the stock in question. I will then make a CAPScall regarding the future performance of the company. Up first is Genworth Financial Inc (NYSE:GNW).

Who is it?Genworth Financial Inc (NYSE:GNW) has been around in some capacity since 1871, when it wrote its first policy as The Life Insurance Company of Virginia. It maintains its headquarters in Virginia to this day, but it offers a variety of insurance products to customers in 25 different countries. The bulk of its revenues come from its U.S. Life Insurance segment, which made up 62% of its revenues in 2012.

Its life insurance business has been fairly robust over the past few years, with the majority of revenues generated by the sale of long-term care insurance. With the continued aging of America, more people are opting for this insurance, which helps cover some of the costs of extended nursing home stays and other services that are typical toward the end of life. However, Genworth Financial Inc (NYSE:GNW) also has a sizable business insuring mortgages, both in the U.S. and abroad, which could be a driving factor in making the company appear so cheap.

How cheap is it?When compared to some other life insurance companies, Genworth Financial Inc (NYSE:GNW) comes out on top, though the industry at a whole appears to be greatly undervalued, at least according to the Graham number: